Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, (2012) 290 O.A.C. 42 (CA)

• Jurisdiction: Ontario
• Judge: Benotto,Blair,LaForme
• Neutral Citation: 2012 ONCA 156
• Court: Court of Appeal (Ontario)
• Date: 14 October 2011
• Citation: (2012), 290 O.A.C. 42 (CA),2012 ONCA 156,347 DLR (4th) 657,[2012] OJ No 1099 (QL),212 ACWS (3d) 832,290 OAC 42,(2012), 290 OAC 42 (CA),290 O.A.C. 42,347 D.L.R. (4th) 657,[2012] O.J. No 1099 (QL)

Hamilton v. Metcalfe & Mansfield Capital (2012), 290 O.A.C. 42 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. MR.009

City of Hamilton (plaintiff/appellant) v. Metcalfe & Mansfield Capital Corporation, Metcalfe & Mansfield Alternative Investments VII Corp., Barclays Bank plc, Deutsche Bank Securities Limited, Quanto Financial Corporation, DBRS Limited, The Bank of New York and CIBC Mellon Trust Canada (defendants/respondents)

(C53208; 2012 ONCA 156)

Indexed As: Hamilton (City) v. Metcalfe & Mansfield Capital Corp. et al.

Ontario Court of Appeal

Blair and LaForme, JJ.A. and Benotto, J.(ad hoc)

March 13, 2012.

Summary:

The City of Hamilton brought an action to recover its losses arising from the purchase of $10 million in non-bank sponsored asset backed commercial paper. A motion judge granted summary judgment dismissing the City's claims against Metcalfe & Mansfield Capital Corporation, Metcalfe & Mansfield VII Corp. and Quanto Financial Corporation (the "Devonshire defendants") in contract, in tort, and in equity. The City appealed the motion judge's decision with respect to the tort and equity claims. The motion judge had dismissed those claims on the basis that they were barred by the two-year limitation period in s. 4 of the Limitations Act.

The Ontario Court of Appeal dismissed the appeal.

Limitation of Actions - Topic 3103

Actions in tort - Negligence - When time begins to run - On July 24, 2007, the City of Hamilton purchased $10 million in non-bank sponsored asset backed commercial paper (ABCP) - The notes were to mature on September 26, 2007 - Three weeks after the purchase, the Canadian market for non-bank sponsored ABCP collapsed - In an effort to address the collapse of the ABCP market, various banks and investors entered into an agreement (the "Montreal Accord") - The City signed the Montreal Accord on August 23, 2007 - As part of the Montreal Accord, all signatories entered into a standstill agreement - The standstill period ended on January 10, 2008 - On September 26, 2007, the notes matured and the City was not paid - On September 25, 2009, the City commenced an action to recover its losses - A motion judge granted summary judgment dismissing the City's claims against the "Devonshire defendants" in tort (misrepresentation and conspiracy) and equity (unjust enrichment) on the basis that they were barred by the two-year limitation period in s. 4 of the Limitations Act - The Ontario Court of Appeal agreed that the City's claims were statute barred - In essence the City claimed that it did not get what the Devonshire defendants induced it to believe it had purchased - The City's cause of action was based on the defendants' misrepresentations, not its failure to repay the notes - Accordingly, all of the elements of its cause of action accrued when the City purchased the notes, not when the notes matured and were not repaid - The limitation period began to run when the City discovered that it allegedly had been misled about the notes and was aware it had incurred some loss, which was sometime before it signed the Montreal Accord on August 23, 2007 - The court rejected the City's argument that the limitation period was suspended for 12 weeks by the standstill provision in the Montreal Accord - The Montreal Accord could not be read as an agreement to suspend the limitation period for the City's claims, either pursuant to s. 22 of the Limitations Act or the similar common law principle - The court also rejected the City's argument that the limitation period was suspended by s. 11 of the Limitations Act for the period that an investors committee assisted or led efforts under the Montreal Accord to restructure the Canadian non-bank sponsored ABCP market - Section 11 did not apply, as a committee overseeing negotiations about ABCP market restructuring did not constitute an independent third party brought in to resolve or assist the parties in resolving the City's claims against the defendants.

Limitation of Actions - Topic 3103

Actions in tort - Negligence - When time begins to run - The City of Hamilton brought an action to recover its losses arising from the purchase of $10 million in non-bank sponsored asset backed commercial paper - At issue was whether the City's claims against the "Devonshire defendants" in tort and in equity were barred by the two-year limitation period in s. 4 of the Limitations Act - In essence the City claimed that it did not get what the Devonshire defendants induced it to believe it had purchased - The City submitted that its cause of action in negligent misrepresentation could not arise, and the two-year limitation period accordingly could not begin to run, until it actually suffered injury, loss or damage, which in this case was the date when the Devonshire Notes matured and no payment was made - The Ontario Court of Appeal stated that the City's position that damage occurred when the Devonshire notes matured failed to appreciate the distinction between damage and damages - The court stated that "Damage is the loss needed to make out the cause of action. Insofar as it relates to a transaction induced by wrongful conduct, as I have explained, damage is the condition of being worse off than before entering into the transaction. Damages, on the other hand, is the monetary measure of the extent of that loss. All that the City had to discover to start the limitation period was damage" - See paragraph 54.

Limitation of Actions - Topic 9309

Postponement or suspension of statute - General - Agreement to have independent third party resolve or assist in resolving claim - [See first Limitation of Actions - Topic 3103].

Limitation of Actions - Topic 9606

Enlargement of time period - General - By agreement of parties (incl. standstill agreement) - [See first Limitation of Actions - Topic 3103].

Cases Noticed:

Nykredit Mortgage Bank plc v. Edward Erdman Group Ltd. (No. 2) - see South Australia Asset Management Corp. v. York Montague.

South Australia Asset Management Corp. v. York Montague, [1997] 1 W.L.R. 1627; 222 N.R. 66 (H.L.), consd. [para. 35].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1, refd to. [para. 36].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, refd to. [para. 45].

Smith v. Union of Icelandic Fish Producers Ltd. et al. (2005), 238 N.S.R.(2d) 145; 757 A.P.R. 145; 2005 NSCA 145, refd to. [para. 55].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 59].

Peixeiro v. Haberman, [1997] 3 S.C.R. 549; 217 N.R. 371; 103 O.A.C. 161, refd to. [para. 61].

Shook v. Munro et al., [1948] S.C.R. 539, refd to. [para. 73].

Shook Estate: Arrow-Kemp Heating and Air Conditionaing Ltd. v. Oddi, 2009 CanLII 23865 (Ont. Sup. Ct.), refd to. [para. 74].

Mortgage Insurance Co. of Canada v. Grant Estate et al. (2009), 254 O.A.C. 77; 2009 ONCA 655, refd to. [para. 74].

Statutes Noticed:

Limitations Act, S.O. 2002, c. 24, Schedule B, sect. 4 [para. 13]; sect. 11 [para. 84]; sect. 22 [para. 72].

Authors and Works Noticed:

Ogus, A.I., The Law of Damages (1973), p. 2 [para. 55].

Counsel:

Peter L. Roy and Derek McKay, for the appellant;

R.S. Harrison and Jennifer McAleer, for the respondents, Metcalfe & Mansfield Capital Corporation, Metcalfe & Mansfield Alternative Investments VII Corp. and Quanto Financial Corporation;

No one appearing, for the respondents, Barclays Bank plc, Deutsche Bank Securities Limited, DBRS Limited, The Bank of New York and CIBC Mellon Trust Canada.

This appeal was heard on October 14, 2011, before Blair and LaForme, JJ.A., and Benotto, J. (ad hoc), of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by LaForme, J.A., and was released on March 13, 2012.